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Tuesday, August 12, 2008

Tragedy of the Commons

This summer, the Powell Center for Economic Literacy, along with the Longwood University Center for Economic Education and other organizations, hosted a teacher workshop on "Saving Our Rivers and Bays". One of the materials used and distributed to the teachers was the book Common Ground. The book stresses the importance of wise use of our natural resources. The first few pages introduce the tragedy of the commons - the idea that land held in common and used by everyone, frequently is not used well as there is little individual incentive to protect it while there is a large incentive to use/abuse it. The book is clearly aimed at the middle elementary grades with its relatively sparse language and lush illustrations. It tells a powerful story, although I thought at the time, it needed something more.

Recently, there have been a couple of good articles that I will recommend for educators. They provide that something more. The articles describe the limits to the concept, as well as a tendency to overstate possible benefits of private property vs. common property.

The first article was in last week's issue of The Economist. It does a good job of explaining how common goods share certain characteristics with both public goods and private goods. Because of this, one cannot and probably should not, attempt to manage common goods the same way as one would manage either public or private goods. Indeed, not all common goods are managable using the same methods. One problem is properly defining and identifying common goods. But once that's done, there are innovative ways to manage the goods, as is demonstrated in the article.

The second article comes courtesy of The New Yorker (HT to Arts & Letters Daily). In the article, titled the "Permission Problem", the problem of cooperation for a common goal when all property is held or protected as private is addressed. One of the key points refers to research which demonstrated revealed one party in a multi-party project may hold their resource back, asking a price for use that makes the whole project unfeasible. I did find myself wondering how the problem was framed, as I suspect that behavior is more likely when the party knows their resource is key or unique to the success of the whole. I suspect that, if framed in a general context, marginal thinking may enter in more frequently, i.e. am I receiving more for the resource in this use than I am in its current use or non-use? But I am not familiar with the research. Regardless, article suggests that mechanisms for coordination can overcome the problem. Sometimes the mechanisms are government instituted, and some are voluntary within the marketplace.

Finally, for those of you interested in a high school level classroom exercise on the tragedy of the common, I would suggest this activity. It should provide some substance for discussion, and could lead into a dialogue on how abuse of a common resource can be limited, providing opportunity for you to integrate ideas from the articles.

We all have our own opinions about many editorials in many sources. I also do not agree with many editorials. However, if I find one that is well-written and explains the concept well, I see no problem using it.

Others are, of course, free to do as they wish.

As to your self-description of annoying, I don't agree. Glad to have you commenting.

Blog Archive Note

All entries prior to August 15, 2007 appeared on the economic education blog of the Federal Reserve Bank of Chicago. Entries between August 15, 2007 and July 31, 2009 were under the auspices of the Powell Center for Economic Literacy in Richmond, VA.